3 Big Things Today, October 15, 2020

Wheat Futures Rise Overnight; U.S. Wheat Woes Offset By Rising Russian Output

1. Wheat Futures Higher as Dry U.S. Weather Continues

Wheat futures were higher in overnight trading as dry weather persists in the southern Plains where hard-red winter varieties are being planted and emerging, while soybeans were lower and corn was little changed. 

No rain has fallen in much of western Kansas and the Oklahoma and Texas panhandles there winter wheat is grown in the past 30 days, according to the National Weather Service’s precipitation page.

Freeze warnings have been issued in the area as temperatures are expected to fall into the upper 20s tonight, the NWS said.

Winter wheat planting in the U.S. was 68% complete as of Sunday, ahead of the prior five-year average of 61% for this time of the year, the Department of Agriculture said. About 41% of the crop had emerged, up from the 35% average.

In Kansas, 74% of the crop was planted and 50% had emerged at the start of the week, while in Oklahoma, 69% was seeded and 39% had emerged, the USDA said. The states are the largest producers of winter wheat in the U.S.

Farmers in the southern Plains are reportedly dusting in their wheat in a bid to get it planted in a timely manner.

Planting into soils with limited moisture could result in uneven stands with high variability or crop failure, said Ryan Flaming, a Kansas State University research and extension agent, in a column in the Newton Kansan yesterday.

Wheat futures for December delivery rose 5 3/4¢ to $6.02 ½ a bushel overnight on the Chicago Board of Trade, while Kansas City futures were up 6 1/4¢ to $5.41 ½ a bushel.

Corn futures for December delivery fell 1/2¢ to $3.96 a bushel.

Soybean futures for November delivery dropped 7 1/4¢ to $10.50 a bushel overnight. Soymeal rose $2 to $365.50 a short ton and soy oil fell 0.67¢ to 33.21¢ a pound.

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2.  Declining U.S. Wheat Outlook Belies Rising Global Production

While U.S. wheat producers are dusting in their crops, Russian output is headed toward the second-highest level on record, which will push global production of the grain to a new record, according to a report from the Department of Agriculture.

World wheat production is now pegged at 773.1 million metric tons in the 2020-2021 marketing year that started on June 1, up from the previous month’s forecast of 770.5 million tons, the USDA said in a report last week.

U.S. output is now seen at 49.7 million metric tons, down from the previous outlook for 50 million tons.

Argentina’s crop forecast fell to 19 million metric tons from 19.5 million, Canada’s output is now expected to be 35 million tons, down by 1 million from the September outlook, and Ukraine production is seen at 25.5 million tons from 27 million tons, the USDA said.

All of those declines were more than offset by Russia, whose wheat production outlook was raised by 5 million metric tons to 83 million tons.

In Wednesday’s more-detailed report, the USDA said if it comes to fruition, Russia’s crop will be its second-largest on record due to a boost in output in the Volga and Central districts.

“Bolstered global wheat supplies support fractionally increased global trade,” the agency said. “Russia’s exports are raised on expanded supplies while a strong early pace of shipments to China lifts that nation’s import projection and supports a record-high domestic consumption forecast of 130 million tons for 2020/21.”

In the U.S., however, smaller-than-estimated stockpiles in the first quarter of the marketing year implies increased use for feed and residuals from June through August, which represents about a 10-million-bushel increase in use.

Despite the increase in global production and mainly due to the decline in U.S. output, the USDA raised its forecast for the all-wheat seasonal average farm price by 20 cents to $4.70 a bushel, according to Wednesday’s report.   

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3. Freeze Warnings Issued For Parts of Midwest and Southern Plains

Cold weather will move into a large chunk of the Midwest tonight as freeze warnings have been issued for much of northern Illinois, southern Wisconsin and almost all of Indiana, according to the National Weather Service.

In northern Illinois and Indiana, temperatures are expected to stay around 30 degrees Fahrenheit and drop into the upper-20s in some areas locally, the NWS said in a report early this morning.

In south-central Wisconsin, temperatures are forecast to fall as low as 29 degrees.

Freeze warnings also have been issued in a line from southwestern Kansas north into northeastern Nebraska, weather maps show.

In western Kansas and eastern Colorado, where newly planted winter wheat is emerging, temperatures are expected to fall as low as 27 degrees, the NWS said. The freeze warning in the area will run from 3 a.m. to 9 a.m. local time on Friday.

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